Cointegration Analysis and ECM of Industrial Economy and Direct Foreign Investments of China

Based on cointegration theory and Granger causality test, applied on the gross domestic production of industry and direct foreign investments economic statistic data from 1983 to 2010 of China to analyze the long and steady dynamic equilibrium relations. Research results indicate that there is long-term stable one-way Granger causality relationship between the growth of gross domestic production of industry and direct foreign investments. The growth of direct foreign investments affect the growth of gross domestic production of industry, but industrial economic growth is not the reasons of the direct foreign investments.